Posts Tagged ‘ASX’

The SGX’s CEO is reported by the FT to have said that the SGX’s planned takeover of ASX is its Plan B. He clarified that Plan A was organic growth by introducing new products. A few months ago he said if the ASX bid failed, SGX “had other fish to fry”. This implied to people like me that Plan A was the SGX takeover and Plan B was some other takeover.

The fact that he has “clarified” his earlier comments shows that he is panicking. See the previous post for the reason.

A A$7.3 billion ($7.1 billion) bid by the Singapore Exchange (SGXL.SI) to take over its Australian rival is faltering as the Australian government, the regulator and a key opposition party are all set to reject it, the Sydney Morning Herald said. Reuters article

The SMH story is extremely credible was it was written by the paper’s chief political correspondent.

This shows that SGX did not do its homework. Everyone who has a say in approving the bid seems against it. Reminder: the takeover needs the approval of the Foreign Investment Review Board, then the Treasurer (finance minister) and then Parliament (where the governing party does not a majority).

The only people in favour are the ASX board and the shareholders. They would wouldn’t they? The shareholders are being offered a huge premium.

SGX should cut its losses and move on. And sack is FT CEO who, I’ve been assured, is the moving force, behind the deal. It’;s not the first time an FT CEO has messed up SGX. It had a previous FT CEO. But the in-between local-born CEO (now president at Temasek) doesn’t have a gd record too, S-Chips continued to be the primary source of new listings (numberswise) when he was CEO, even though evidence that there were problems with S-Chips was growing.

The plan required the seizure of bridges across three rivers and several more canals by airborne forces while armoured divisions made a dash along the road linking all the bridges. All this while fighting the Germans, If the plan worked, the Allies would outflank the German’s Siegfried Line by driving into the Ruhr, Germany’s industrial heartland.

The operation failed because it required all the main bridges to be captured and for the armoured divisions to overcome the German defences swiftly. But the terrain was ill-suited for armoured warfare.

Sounds like SGX”s bid for ASX. The takeover must be cleared by the Foreign Investment Review Board, the Treasurer and then enabled by legislation. Taz like seizing all the bridges.

As to bad terrain, the Greens and independents don’t like it.. One reason they don’t like it is because the Singapore government is itself a shareholder in SGX through its investment arm, Temasek (it will own almost 15% of the merged group).

Finally, there is the fact that the Oz government government has singled out sovereign investments in Australian companies as a concern.

So I’m glad to hear that SGX has other plans if its plans to takeover ASX fails.

81% of its assets are in Australia (with 45% in Victoria and NSW), with 29% of these assets in retail assets and 38% office assets. As at June 30, its published NTA was 39 Australian cents, or 50 Singpore cents. The share price was 13.5 Singapore cents on friday.

A steal at 13.5cents? Well on ASX it was trading at 9.5 Australian cents or 12 Singapore cents. The Singapore price is a 12.5% premium to the Oz price.

Do the Oz investors know something abt the state of the Oz assets, that Singaporean investors don’t? Or is it sheer illiquidity in both markets?